Privia Health Group Inc. Q1 2023 Earnings Call

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Good day and thank you for standing by welcome to the preview of Health Q1, 22, or three conference call.

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Please be advised that today's conference is being recorded.

I would not like to hand, a conference our speaker today, Robert Patrick Robert Please go ahead.

Thank you good morning, everyone. Joining me today are Sean Morris or Chief Executive Officer of Park Borough, President and Chief operating officer of data Mountcastle, Our Chief Financial Officer. This call is being webcast and be accessed from the Investor relations sexually a pretty health dot com.

Today's press release, highlighting our financial and operating performance and a slide presentation accompanying our formal remarks are posted on your back.

[noise] relations pages are pretty health dot com filing our prepared remarks, we will open the line for questions. Please limit yourself to one question only a return to the queue. If you have a follow up so we can get to as many questions as possible to.

The financial results report today and in the press release are preliminary and are not final until our Form 10-Q for the first quarter ended March 31st.

2023, as valid as S, which was a curious exchange commission, which was filed earlier today.

The statements you've made today are forward looking in nature based on our current expectations in view of our business as of May 4th 2023.

Such statements Clooney, those related to our future financial inoperative forwards and future business plans and objectives are subject tourists or uncertainty as it may cause the actual results with differ materially as a result. These statements should be considered in conjunction with the cautionary statements in today's press release and the risk factors described in our company's most recent SEC filings.

Finally, we may refer to certain non-GAAP financial measures on the call and reconciliation of these measures to comparable GAAP measures are included in our press release any accompanying slide presentation posted on her web site now I'll turn the call over to Sean.

Thank you Robert good morning, everyone.

Did it help delivered solid first quarter results to start 2023.

We continue to execute in each of our mortgage.

We remain focused on driving towards our long term vision to build preview of health and one of the largest ambulatory care delivery networks and the nation.

Our market my modem and highly a life partnership model continue to drive growth on multiple fronts and support our high level of confidence in our 2023 outlets.

This morning, I don't know if you're a few business highlights heart will all for a market and operational update and then David will discuss a recent financial performance and our 2023 guidance outlook before we take your questions.

During the first quarter prevail continue to execute at a very high level with practice collections, increasing more than 17% year over year.

Justin EBITDA, what's up almost 14 per cent. If we continue to increase our number of provider partners and invest in our recent market interest.

This performance was again driven by continued same-store growth as well as our new provider addition to an existing market.

And the last few months, we've entered 40 states have already signed new providers and our medical route platforms in Connecticut, North Carolina and Ohio.

We continue to see a very strong sell style of potentially providers across our markets and our maintaining a healthy business development pipeline as we look to enter additional states over the next few years.

Separately, we are very excited I have locked in price. This morning, a large secondary offerings of the company's total diluted shares outstanding.

Transaction substantially reduces or eliminates Goldman Sachs in Pamplona capitals ownership. We're also very excited to welcome.

A number of new longterm oriented vasquez, including durable capital partners and Rubicon founders among others, who purchase shares in this transaction.

The entire previous team looks forward to executing on our strategy continue to create value for our shareholders in years to come.

In other news we ratio now so I plan to retire at the end of June at our board of Directors named Park Monroe Drive to succeed me as Chief Executive Officer of preview Hell I decided it now what's an opportune time to step away from my operating relative spent more time focused on my personal interest.

Remain on Abbreviate Board and I look forward to continuing to track previous future success.

Park and I've worked very closely together over the last five years. So many of you know park has been an integral part of establishing previous presidents and many other states, taking our company public in 2021 and directing previous growth, we expect a very smooth transition and it will be exciting to watch part of our leadership team drive previous next phase of growth.

It's been a privilege to interact with many of you and the more than 900 previous dedicated to improving health now S parked the provider market and operational update.

Thank you Sean it hasn't been an absolute pleasure to work with you and a privilege to succeed U S. C E O.

We continue to expand previous national footprint, which now includes more than 3700 implemented providers in a medical groups caring for over 4.4 million patients and 970 locations.

We believe our scale and diverse provider and payer partnerships offer a true differentiator as we build one of the largest multi specialty medical groups and ambulatory care delivery networks in the country that can improve patient outcomes and reduce costs.

And again, it demonstrates the strength and diversification of our book and how well we performed in the rest of the value based book, giving a results. This morning for Q1 and a confidence for the rest of the year. So we don't see any further downside impact from this book and then more importantly, as we'd reevaluate the decision in future years.

Alright, Thank you and for your next question. It comes from the liner Freeride close from Canaccord Recharge. Your line is open please ask a question.

Yes, Thanks further questions, Congratulations Sean and park.

Yeah. So thanks, Richard you know overall, we thought we would be implementing provide our sometime next year.

Four or five year period to try and get billed.

Hey, good morning, and yeah. Congrats again to both of you guys and hopefully shuttles ear out here in Nashville, I guess, one question for us as I think about the hundred plus Darcy added during the quarterly any color you can give us here so.

Breakdown between organic recruitment and conversions from Brivet care partners and what we're seeing in terms of the pipeline for both of those buckets of organic growth.

With a very large installed base and that's a very good organic growth for us. So we're.

We're really excited to see that happen too.

Hey, guys. Thanks for the question. So you did allude to the large embedded value based opportunity within previous patient panels, but if you divide the number of attributed lives in the quarter by the number of patients across the patient panels that your record and he was like $4.4 million would come up with.

That the percentages up around 130 basis points you over here the penetration rate and it's actually down verse 2021. So is this the kind of rate penetration expansion that you expect or the penetration of diabetes care should be relatively studying that all new growth and diabetes caroline's have to come from new doctors or is there some expectation around.

Increase in penetration and if so.

What is the timing of that and what what specifically are you looking for before you move more patients into risks. Thank you.

Yep, Thanks, Adam a great question.

The uniqueness of our business is we do.

Value based on all books commercial MSB medic aid and there's a lot of opportunity, especially in the commercial book and then also sometimes in the medic aid book, where you could have a lot of the existing lives moving to a value based arrangements with a particular bear in that.

And specific geography's. The EMEA lives, obviously have a much more well understood Bath, where where we can have lives participate in MSS b or Medicare advantage. So you know I think there's a massive opportunity for us to move a lot of those 4.4 million patients in some form of value based arrangements.

It will not happen overnight, it's Ah, it's Ah, we try and movies and big chunks, and you'll see them spread across all our books of business and.

And then the second part of that strategy is obviously to increase the level of performance increase the level of risk and hopefully that goes in tandem with increased level of performance and then therefore, our ability to generate chat savings for our health plan partners for the doctors and for us.

And then I'll take rate is 40% so the operating leverage even on the existing book is pretty substantial and then obviously on top of that is you are seeing with deals like Connecticut.

That's in your geography, new clinically integrated network, we did not have close to 200000 lives and 1100 providers.

You know two quarters ago, and you can see the amount of opportunity, we have and just expanding into new geographies with new doctors and then also with new doctors an existing geographies.

That we can layer on top of that so I think it's both Same-store same book of business and then and then new providers in your lives that come with them.

Great. Thank you.

Thank you and for your next question. It comes from the line of <unk> French jurist Caroline is open.

Thank you. Thanks for taking my questions in the morning, <unk> and come back and best wishes to both of you. What's a good clarification just going back Congest question about what most of the revenue impact will be 16000, <unk> life's decline Ya I mean, I'm, assuming that Scott 30, no guidance now I'm kind of incremental headwind and then my main question and I <unk>.

The late so apologies if you're already covered this <unk>.

Transferring some strong utilizing trends highlighted by some providers I was wondering if you could talk about <unk> transfer you guys across the business line anything meaningfully different to call out in terms of information between your bear claws and what are you assuming income so you could actually progressed up 23.

Yep. Thank you Jill endless I'll just take them in order. So on the first one and as we noted we recognize all <unk> impact on on that book and Q1 and despite that results already strong so that was largely more than offset by our good performance and the rest of the value based books on the top line side again.

Both the fee for service and value based book is performing very well. So there's a lot of upsetting. So we don't see any net impact which gives us confidence to maintain.

And Dana guidance as we have obviously, if we eliminate capitated arrangement you add back the fee for service revenue because these lives are still with US. The doctors are still seeing these patients and.

So the net impact as as much lower from that perspective, again that that bodes well for I was having the confidence to maintain the guidance. So both from a top line or a bottom line perspective.

We should not see any any further net impact there's some movement and there's some upsetting.

And that's what gives us confidence this point of the ER to just maintain our guidance and then you know we are seeing pretty good utilization trends that has continued as as we've gone through this tail end of the Covid period that is.

Very consistent with with last year.

And again R. R R.

<unk> strategy is to be prudent when we planned for utilization and guide and if there's a surprise hopefully to the upside so you're seeing some of that strength lay out in our book even know ambulatory utilizations been much more stable as we've talked about previously versus you know.

Soldiery oriented or specialty utilization, which can be lumpy, but we are seeing pretty good strong strong France continue across our across our book.

Great. Thanks, a lot.

Alright, thank you.

Police time to buy for your next question.

Entering next question comes from the line of <unk> from Stevens Chapter. Your line is open. Please go ahead.

Hi, good morning, Thanks for taking the questions and I'll check with a congrats to shine in part.

Ah Ah bookkeeping question for me, maybe I misheard jumped on weight, but wanted to see if you gave the care partners number of providers that at the end of period.

And then my larger question is seen the the cost of platform showing good leverage in the corner and I'm. Just curious if there are any investments that you think you you need the the rest of the year for the platform and and how to think of timing of any incremental spend their thanks.

Yep. Thanks for the question just take them in order. So we're not breaking out care partners lives separately, but they are all included in the 1 million plus attribution as we've said before the the Connecticut.

Lives about 200000 thereabouts are all all the care partners BB healthcare in Delaware does all care partners as we outlined up at the last quarter.

So you can see some of the numbers, there, but uhm and again those will grow in chunks over as we do these deals and it's it's better than that and then what we expected. So so we're pretty excited about that and then from a platform.

Contribution perspective again to up.

The level of spend is fairly consistent during the course of the year because we are setting up these new states with sales implementation leadership teams and that spend as a pretty pretty standard an equally spread throughout the course of the year, Yeah, but then obviously as as stop line impact comes in you start to see some more operating leverage so.

From a modeling perspective.

Quarter over quarter, you should see similar trends to last year.

Given all the MSB results and statements happen in Q3, So you will see the same trends pretty much what the Spence pretty consistent.

Mmm, Great and then just following up under the care partners side of things.

I wanted to see if you could give any detail on the the number of providers just knowing that I believe that's not included in the implemented provider account. Thanks.

Okay, Yeah, we're not breaking that out I mean, it's you know again there are some you know obviously like I said, the Connecticut providers. That's about 1100 BB health care was about 100 Bcp's, we've disclosed that before so it's similar to what we said last quarter. Yeah. We expect the update to care partners number on.

An annual basis.

Oh God that helps thanks again.

Thank you and please stand by for your last question.

And for the last question. It comes from the line of Fry in Daniel's from you and Blair. Brian . Your line is the best place to ask questions.

Yeah. Good morning, guys. Thanks for taking the question I'll add my congrats to both person Sean been great working with you guys.

My question revolves around more of the specialty care business I know you are involved with.

C. As you do a lot of pediatrics, but we're hearing a lot of buzz in the industry about things like nephrology and C. K D oncology et cetera. So I'm curious what your per view is there if you've looked at going out more aggressively with some of the specialty groups and participating in some of those Ah combo karyotype organizations or risk based contracting.

Thanks, guys.

Yeah. Thanks, a lot I really appreciate it look.

We are consciously from day, one have been building multi specialty groups for this particular reason.

80% of the cost is downstream from the P. C. B, we have 52 specialties today.

That form and I think it's it's a great opportunity for us going forward, we already participate in some programs in a pretty minor way bundles, and so forth, but I think going forward as we.

Both organically internally as well as through partnerships you should expect us to look at some of these specialty specific strategies it'll.

It'll be again, very dizzy specific or specialty specific as he outlined so and then geography specific way, we have density and lives and we can make a big impact, but I think it's a big part of our strategy going forward.

So if we have no further questions Kyle Alaska, Sean Morris, They just take a quick closing statements.

Did you Wanna. Thank you everybody for.

Listen to our call Dave.

Really enjoyed <unk> and look forward to talk to you more and we appreciate your continued interest in <unk>.

Port for a company enjoy the rest of the day.

Okay.

Mmm.

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